The death of the hotel star rating system?

by Rajul on January 10, 2011

Our harsh verdict on the hotel star rating system: get in synch with today’s customer or face extinction

Checklist-based star rating systems were historically the natural way to rank and classify hotels. When the Savoy opened in London in 1889 it was seen as the ultimate luxury hotel: features like electric lifts and individual bathrooms were a genuine novelty and the epitome of indulgence.

As competitors in the next century caught up or themselves innovated, professional expertise was needed to keep track of who provided what.

There was a constant “arms race” of amenities and services during later waves of hotel development, from the apparently banal (“shoe shine service”) to flamboyant leisure facilities, imposing lobbies and expensive restaurants. Today the battleground has moved on to iPads, sophisticated in-room technology and free WiFi – but in the meantime, consumer expectations have undergone a fundamental shift.

Hotel star rating systems may originally have served a useful purpose when amenity innovation and facilities had a disproportionate influence in determining the choice of hotel. This may be why hotel rating systems even now put great emphasis on ticking off big lists of “features”.

But with the abundance of user-generated hotel reviews and the fact that many eye-popping hotel amenities of the past are now seen as “standard” (or worse still, irrelevant), are star-based hotel ratings an anachronism?

Once upon a time you could judge the quality of a hotel by the number of kitchen staff as this charming photo taken in 1910 at the Langham London (still an excellent hotel today) illustrates – but today the goalposts have moved significantly

As hotels set ever-higher expectations, you could argue that great service (given only a cursory mention by many star rating systems) is the new differentiator. And the arrival of boutique luxury hotels looks to have further changed consumer expectations. So could the star rating system be in its last throes? The evidence is certainly mounting:

Rating systems are too complex. The process behind getting evaluated is very opaque and known only to hoteliers – not consumers. The leading rating system in the UK for example has been developed by the AA – a respected and professional organisation, but its detailed quality standards are hard to unravel from a consumer perspective.

Rating systems are fragmented. There is no global standard and perceptions are often driven by cultural factors – for example a 3 star hotel room in the US is expected to be fairly large, in Europe not. There are even conflicting systems within the same country – in the UK at least, the two main rating bodies (Visit Britain and the AA) have made an effort to synchronise their approaches in recent years.

Rating systems tickboxes that do not matter to consumers. Online guest reviews allow you to skim and identify specific factors that may matter to you (rather than general factors which ratings organisations assume will matter). For example, the AA “5 star” classification (which you can access if you download the detailed grading criteria) includes things like “A choice of environments in public areas of sufficient size to provide generous personal space”…but with the advent of luxury boutique hotels, is a huge lobby important? I’d argue on the contrary that our notion of luxury now sees small and intimate as beautiful. There are also odd items like “cloakroom service” which 5 star hotels apparently need but which most guests consider irrelevant at best.

The sample size of guest reviews trumps a hotel inspector’s visit. Despite the faults of TripAdvisor reviews, sample size is critical. If hundreds of recent guest reviews tell you a hotel is performing well (once you sift out irrelevant or dodgy ones), isn’t that more convincing than the fact that an inspector ticked a checklist a while ago? The Arthur Frommer argument that professional reviewer opinions are somehow intrinsically superior is rejected by most travel-savvy consumers. I do concede one point to Frommer though: TripAdvisor has to tighten up how it verifies if someone genuinely stayed at a hotel.

Star ratings have been severely devalued. There are a couple of factors at play: the first being that hotels in the UK can self-declare. I know several so-called “4 star hotels” in London for instance which fall well short of this level. There is also the recent trend of “ratings inflation“. This has been driven by the marketing departments of new hotels wanting to make a splash by declaring themselves 6 star (or even 10 star like one in the Middle East). While there may sometimes be big investment to justify this, in most it’s just a cheap marketing ploy. For example, will the supposedly 6 star Wellesley (due to open in 2012 in London) really be better than established ultra-deluxe 5 star London hotels? I very much doubt it – and certainly not on its opening day.

Service is not properly assessed in star ratings. Service has now become the magic key, especially at the luxury end. Bizarrely, ratings systems assess service in a formal and out-of-date way. For instance, the AA considers several “throwback” factors as essential to a “5 star” grading: like giving guests a detailed tour of the room or presenting themselves “in a uniform way”: retro aspects that may have mattered decades ago but not necessarily today. You could argue that the last thing busy executives want is a staff member doing an elaborate check-in or giving irrelevant information when they may only want to shower, work and relax. Yet hotels which excel in this modern style of time-conscious, non-intrusive service are theoretically penalised by star ratings – while often being very successful on TripAdvisor.

Cosy boutique hotels like the Egerton House in Knightsbridge – where staff like charismatic barman Antonio are the “stars” – are all the rage and ratings bodies need to adjust their criteria to accommodate this “small is beautiful” trend

TripAdvisor reviews are far from perfect (I have criticised them myself through this blog’s TripAdvisor User Guide) but they do at least empower the consumer to sift through raw primary data rather than secondary data.

As with all raw data analysis, there are risks and pitfalls. But it is patronising how “professionals” assume that consumers are not capable of assessing this data and reaching their own assessment. To this end, expert hotel blogger Daniel Craig offers strong arguments as to why hotels should be working with TripAdvisor and not trying to sue it.

There is after all an art to reading guest reviews on the internet which most people brought up on the web understand perfectly well. Let us now look at a practical case study to evaluate the hypothesis that hotel star ratings are out of synch with the needs of today’s consumer.

The best London hotels according to TripAdvisor versus the AA

If you list the “best London hotels” on TripAdvisor, you’ll find them very distinct from the “best London hotels” ranked by official star rating. For example, several 5 star (AA) hotels languish well down the TripAdvisor list.

How can such hotels justify their lofty “5 star” price tags, if guests who recently stayed in them rank them below much cheaper hotels?

On the other hand, many less celebrated hotels punch well above their weight in the top London hotels on TripAdvisor. Here is the top 10 from a few days ago (it may have changed since) out of over 1000 London hotels:

TripAdvisor Top 10 as of 3rd January 2011 (with AA rating in brackets)

1. Hotel 41 (5 star)

2. The Levin (4 star)

3. Egerton House Hotel (5 star though black stars)

4. The Milestone Hotel (5 star)

5. The Hide (claims to be 4 star but cannot find on AA)

6. Soho Hotel (not rated by AAthough classed 5 star by other bodies)

7. Sofitel St James (5 star though black stars)

8. The Arch (not yet rated as too new)

9. Hilton Tower Bridge (not rated by AA)

10. The Montague on the Gardens (4 star though black stars)

Hotel 41 doesn’t have a big lobby nor a formal restaurant – yet it’s currently the number 1 London hotel on TripAdvisor because guests love its intimate, boutique-y feel

Big anomalies…

There are some striking discrepancies in the above list.

For starters, isn’t it odd that several of the top 10 London hotels are not even rated by the AA? It’s no coincidence too that almost all could be called “boutique hotels” – which rating systems apparently struggle to cope with.

It’s also surprising that there are several “4 star” hotels above and that two of the 5 star ones are miserly black stars (not seen as good as five AA red stars) – the Egerton House Hotel and Sofitel St James. But both are hotels which past guests seem to adore and well-established stalwarts of the TripAdvisor top 10, as is the Soho Hotel which is not even classified.

In fact, it appears that only two of the above top 10 hotels are rated “proper” (i.e. red) 5 star hotels by the AA.

The AA does though grant 5 red stars to other well-known hotels which TripAdvisor users don’t consider among the best London hotels (though they may still be fine hotels). Such hotels must however be ticking the “traditional” 5-star boxes of big lobbies, full-service restaurants and so on.

And a hotel like Montague on the Gardens (no. 10) doesn’t even get a proper 4 star rating from the AA (it has black rather than red stars), despite its great guest reviews. I know having visited the hotel that its service standards match many 5 red star hotels. Indeed, the group managing it (Red Carnation Hotels) also runs the hotels at number 1, 3 and 4 on TripAdvisor – and they train staff in a similar way across all their hotels.

By offering modern “stripped down” luxury (e.g. discounts at local restaurants and in-room mini kitchens) Base2stay Kensington theoretically gets penalised by hotel inspectors while getting an enthusiastic thumbs-up from its guests

The AA is a superb organisation and the AA website an excellent resource. But why are its star ratings apparently out of step with real user assessments of hotels? The missing link in star ratings may be “value for money” – something naturally built into the much-maligned guest reviews.

There is no such thing as “the best hotel” in a given city, only the one most suited to your needs and budget. And by reading online guest reviews – or blogs which aggregate such reviews like London Hotels Insight – consumers can get a specific handle on the key differences between hotels.

Therefore it could be argued that the ultimate measure of a hotel’s quality is: “would you be willing to recommend it?” And that’s ultimately a question that guest review sites like TripAdvisor allow consumers to explore which star ratings don’t directly communicate.

As the company told London Hotels Insight: “”TripAdvisor offers wisdom of the crowds and a reflection of a hotel from potentially thousands of travellers. This is provided in various ways – a hotel can be measured according to user reviews; an average rating out of five; the percentage of reviewers who’d recommend the hotel; and against other hotels in the same area. These measures, combined with the sheer volume of reviews from 40 million users, allow a traveller to get the opinions of many before they book.”

So while TripAdvisor is far from perfect and would benefit from more competition and improved policing of reviews, its data-driven nature, scale and popularity currently make it a more reliable tool than hotel star ratings.

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